By Elizabeth Seeger Sep 13, 2021
This year marks the tenth anniversary of our first public “ESG Report.” Ten years ago, there were significantly fewer frameworks, investor-reporting protocols, or even requests for data and reporting compared to today. In 2010 and early 2011, we engaged with various stakeholders to understand what they thought was important to include in KKR’s first report. Many guided us to focus on our investment process and how we are incorporating ESG considerations into that process. Others—very nicely—told us we should not be spending time on this at all. How things have changed!
Reporting and the transparency that it brings is critical to a more sustainable economy, but, as we have learned over the years, there are various drivers and applications of ESG-related reporting. It is complex, even within KKR:
- As private markets investors, we need to access information from our portfolio companies to understand opportunities for us to partner with them over time to both protect and enhance value.
- As lenders, we need to access data from issuers and sponsors to understand risks and opportunities that companies may face.
- As investment managers, we must produce information to share with our limited partners on how we are doing this work and the outcomes we are achieving.
- And, finally, as an issuer ourselves, we have public shareholders and rating agencies that seek to evaluate us, just like we evaluate the companies in which we invest.
Underlying all of these efforts is a need for not only more data, but better data and better analytics. I can confidently say that many of us are working to solve for this, but we are collectively experiencing some growing pains. We think it is through constructive dialogue and cross-sector collaboration that we can keep ourselves accountable and aim for real progress. KKR is committed to being at the table and being part of the solution as the financial community and its stakeholders work to achieve a more sustainable economic system.
It is for this reason, among others, that we are pleased to publish two important reports today:
Our 2020 ESG, Impact, and Citizenship Report, titled Unprecedented, represents KKR’s tenth annual report dedicated to describing our responsible investment efforts. The 16-page document is a short summary of our ESG, Impact, and Citizenship activities for 2020, outlining the unprecedented realities of the last year while also highlighting the ways that KKR has shown up to help, work, and grow. Among other things, in 2020 we did not publish a standalone PDF report because we diverted team resources to support our portfolio companies during the pandemic. We share some of our work on this critical topic in this report.
Our Global Impact Overview and Highlights Report includes excerpts and highlights from the full 130-page Global Impact Fund’s 2020 Impact Report, which is provided to Limited Partners and Fund prospects, and focuses on KKR’s Global Impact strategy of investing behind scalable, commercial solutions to solve critical global challenges. Since the Global Impact Fund launched in 2018, this is our first public report which includes portfolio companies’ highlights across our four investment themes and impact and ESG metrics. This builds on and is complementary to our previous 2019 and 2021 disclosures outlining Global Impact’s approach to impact and ESG management.
Both reports can be accessed on our site at kkresg.com. In fact, our ESG, Impact, and Citizenship Report and Global Impact Fund Highlights are part of a suite of reporting documents and disclosures, which can be found on our Resource Center at kkresg.com, including our Sustainability Accounting Standards Board (SASB) report and supplementary ESG disclosures. We are also planning to publish additional information on our climate strategy in the coming months.
When it comes to our reporting efforts and practices, KKR has a long history of transparency:
- We have been signatory to the UN Principles for Responsible Investing (PRI) since 2009, and we published our first ESG report in 2011.
- In 2017, we began publicly sharing our responses to the PRI Limited Partners’ Responsible Investment Due Diligence Questionnaire.
- In 2018, we launched our Global Impact Fund which invests in companies where the core product or service is helping to achieve one or more of the UN SDGs.
- In 2019, we became a founding signatory to the Operating Principles for Impact Management.
- In 2020, we published our updated Responsible Investment Policy.
- We regularly communicate the results of our efforts to integrate ESG considerations into our investment process. Through relevant key performance indicators (KPIs) aligned with the PRI, we track our performance against goals. Our progress for 2020 can be found at kkresg.com/responsibility.
While we are proud of these milestones and the progress we have made since 2008, we know there is always more work to do and a need for constant learning and improvement. The landscape is moving fast, and ongoing activities in the industry (see the recent merger of SASB1 and the International Integrated Reporting Council (IIRC) to form the Value Reporting Foundation, as one example) is a clear signal for the opportunity for alignment and harmonization. As practices evolve and stakeholder expectations around decision-useful ESG information increase, the bar will continue to get higher. At KKR, we remain flexible in our approach, but steadfast in our commitment to advancing action and dialogue while promoting transparency through our own ESG-related practices and reporting.
1. Elizabeth Seeger has been a member of the Sustainability Accounting Standards board since 2017.